Despite the yen's gains, sentiment toward the yen continued to remain negative, with twelve-month risk reversals continuing to be skewed toward yen puts, reflecting a higher cost of protection against a sharp depreciation of the yen against the dollar.

But if appreciation of the Japanese yen were to lead to increases in Japanese imports and reductions in its exports, then Japan might be expected to have an enormous trade deficit, given that the exchange rate was 360 yen to the U.

The dispersion of the probability distribution of the future dollar-mark exchange rate one-month hence implied by currency options prices was little changed over the quarter but became skewed toward a weaker dollar against the yen, reflecting a higher cost of protection against a sharp downward move in the dollar-yen exchange rate.

All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional.